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Martin Slabbert, co-founder of Prime Kapital, is someone that you’ve become familiar with thanks to the ongoing corporate finance activity around MAS Real Estate.

Prime Kapital has launched a voluntary bid to acquire all the shares in MAS, with the SENS announcement and circular having been distributed to shareholders. These documents can be complex to understand, so this podcast is aimed at explaining some of the key concepts of the deal and giving further insights into the recent noise in the market around MAS’ relationship with Prime Kapital.

I was joined by both Martin Slabbert and Johan Holtzhausen, Chairman of PSG Capital, in his capacity as advisor to Prime Kapital. This podcast will be a useful resource to help you research and understand the transaction.

Important disclosure: Prime Kapital has paid a market-related fee for the production and placement of this podcast. The views shared by each of Martin Slabbert, Johan Holtzhausen and The Finance Ghost in this podcast reflect their opinions on the topics covered herein and should not be seen as financial advice. As noted in the podcast, The Finance Ghost currently holds a position in Hyprop, although Hyprop’s offer for MAS has been withdrawn. The Finance Ghost has no position in MAS. As always, do your own research in forming a view on this transaction.

Listen to the podcast here:

Transcript:

Introduction and disclosure: You’ve heard from Martin Slabbert of Prime Kapital before on the Ghost Stories podcast when he recently used this platform to talk about the terms of the Hyprop offer to MAS shareholders. That offer is no longer in play. Instead, we now have an offer from Prime Kapital to MAS shareholders, with the circular publicly available for you to go and do thorough research – and you certainly should. Prime Kapital values the Ghost Mail audience and has thus returned to this platform to give further details around that offer. Martin is joined by Johan Holtzhausen, Chairman of PSG Capital, in his capacity as advisor to Prime Kapital. As always, you must treat this podcast as adding further information to your research process, not replacing your research process. You should certainly not see it as financial advice and you should always consult with your financial advisor when making decisions around financial instruments like, for example, shares in MAS. I do hope that this podcast enhances your understanding of the proposed transaction and I must remind you that the views shared on this podcast are the views of those giving that opinion and do not necessarily reflect my personal views on all the matters covered herein. Enjoy the podcast.

The Finance Ghost: Welcome to this episode of the Ghost Stories podcast. I come to you to talk about a SENS announcement and an offer that is hot off the press. It is so hot that it reminds me of a beautiful fresh croissant, or your favourite pastry, when you go on holiday to one of those little towns and you go visit that bakery early in the morning and you get that smell. That’s how fresh the SENS announcement is. And of course time will tell if the MAS shareholders find it quite as palatable as that image that I’ve hopefully created in your mind.

Now the good news is that to help us understand this offer in a lot more detail, we have two guests on this podcast. The first is Johan Holtzhausen, who is the Chairman of PSG Capital – thank you Johan for joining us – as well as Martin Slabbert of Prime Kapital. Martin, you are certainly no stranger to regular Ghost Mail readers and listeners. They heard from you quite recently on a podcast where you did a great job of sharing your views on the Hyprop offer to MAS shareholders and you didn’t hold back on your views – I always respect anyone who can actually say how they really feel. So well done on that. That offer has subsequently been withdrawn, which is interesting, that happened after we recorded that podcast and you gave your views on that offer. And Johan, you are certainly no stranger to anyone who has been anywhere near the corporate finance industry. So thank you both for joining me here on this podcast.

Johan Holtzhausen: Yeah, thank you Ghost – or Mr. Baker should I say?

The Finance Ghost: No, I’ll take it. Look, food is the other love, so we’ll go with food and markets. But today it’s very much markets! And we are here of course because Prime Kapital has launched a voluntary bid to acquire the shares in MAS now. This is structured as an offer, not as a scheme of arrangement or similar, so that’s an important nuance – and I’ve had a chance to look at the SENS announcement but not to really review anything in a huge amount of detail. So I’m very happy to have you here on the podcast with me to actually talk through a lot of the details. However, another thing I want to just bring up right up front is that there is a cash portion as well as preference shares involved here, inward listed preference shares.

And really the goal of this podcast today is to just help listeners understand what you are seeing in the SENS announcements, in the circular – these docs are not always easy to follow, no matter how well they are drafted. They’re quite complex things. And I think this podcast will be really helpful for not just retail investors, but I think institutional investors alike. I know they’ll be listening to this as well.

So Johan, Martin, thank you for valuing the Ghost Mail audience. I think let’s jump into it and before we even get to the offer I think, Johan, let’s start with you – perhaps you can just confirm for us PSG Capital’s role in this voluntary bid and in this transaction?

Johan Holtzhausen: Yeah, thank you very much. We’ve been appointed as the corporate advisors to find amicable solutions and liaise with shareholders on behalf of PKI. Our specific role is as a strategic advisor to PKI for this offer phase and for the value optimisation framework which will follow this initial offer phase. I may just add here that there’s been a lot of dust in the air around MAS, but we believe the offer provides an alternative to shareholders whether they wish to sell or remain shareholders in MAS. The offer was published this morning as you’ve alluded to and that you may have seen, which we will unpack and provides a lot of flexibility to shareholders.

The Finance Ghost: Value optimisation framework certainly sounds quite interesting and that’ll be something to dig into in time to come and for those who want to obviously go and do much more research on that. But I think let’s understand the terms of the transaction today on this podcast – Johan, I guess with that out of the way and just confirming your role on this, perhaps you’re the right person then to just take us through some of the key terms of the transaction. What is actually being offered to shareholders and perhaps most importantly, what choice are they actually being asked to make here? What is the decision that they need to make as shareholders?

Johan Holtzhausen: Thank you. No problem. In summary, this voluntary offer is by PKI to acquire MAS shares for either cash, that is €1.40 per MAS share. Now in rand, that equates to approximately R29.22, which is a 28% premium to the current MAS share price and a 31% premium to the 10-day weighted average. Or, they can elect to receive preference shares, or a combination of cash and shares – and that is all contained in the offer that shareholders will receive.

Importantly, the voluntary bid provides flexibility, as I’ve said to shareholders, to choose to elect a specific consideration which is best for them, or they can remain invested in MAS and do nothing. Perhaps I could also mention at this point that the maximum cash amount of approximately €110 million – or not approximately, of €110 million – which is approximately R2.3 billion – is subject to a potential further increase by PKI should circumstances warrant that. Then I can add even if the maximum cash cap is hit, there’s no automatic filling with prefs if you do not elect to do so. Instead, you keep the shortfall in MAS shares.

As you would have seen Ghost, this offer launched today and will be open until the 14th of August. So I would advise shareholders to please contact their brokers to accept so if they so wish. Maybe I can just say that there are two regulatory matters, but the bid itself is not conditional upon these approvals. The mechanics of the bid will simply be adjusted as required.

The Finance Ghost: So Johan, we’ll talk about the timing – I think Martin, that question’s coming your way just now because that is something I definitely wanted to ask about – but I think before we get to that, you’ve made it clear there that it’s mainly regulatory conditions in this bid. And I know that there’s also a condition related to minimum cash acceptances which we’ll get to later

Johan Holtzhausen: Just to clarify – the offer is unconditional barring PKI acquiring a 10% acceptance, but that can be waived.

The Finance Ghost: And that’s obviously an important nuance versus the previous bid that we saw for MAS, which came in from Hyprop.

Martin, I think from your side, Prime Kapital called it the “Hyprop free option” which was a rather spicy term that I remember from the press release. Definitely ruffled a few feathers and we discussed on that podcast why you feel that way, or felt that way at the time certainly, which was really not that long ago. So anyone who’s interested, go back and listen to that podcast, go and listen to Martin talking about the Hyprop offer. We’re not going to go over all of that ground again today. Definitely not.

We do know as well that of course stones should never be thrown from glass houses. So this is the question to you is: why is this not a glass house? Why do you feel that this offer is so superior to what Hyprop was putting on the table? And I think as corporate advisor Johan, I’m going to make that the last question that I send in your direction and then we’re going to get some insights from Martin on this one.

Johan Holtzhausen: Thank you. No, I think Martin was correct. This unfortunately was a free option because it was riddled with conditionality and the Hyprop board still needed to decide whether they proceed or not. But it’s important, as we’ve said in the beginning of this podcast, that the Hyprop option has been withdrawn. So it’s not on the table anymore.

I believe the PKI offer metric are solid, as displayed inter alia by the premiums offered that I mentioned, and it provides a liquidity event for those that wish to exit. Furthermore, the PKI offer presents protection against opportunistic approaches such as Hyprop. And MAS shareholders have a choice. This offer is not tied into lengthy processes and PKI has given certain undertakings that if they cross 50% threshold and this includes minority protections, that they will not increase their shareholding, etc.

So to conclude, I think the PKI offer benefits all and it’s a voluntary offer, it’s a friendly offer and it ensures long term stability for MAS.

The Finance Ghost: Yeah, Johan, thanks so much. And for anyone listening to this who’s wondering why it sounds like nature in the background, that’s because Johan is actually away. The poor man is on holiday. But I know from my days in the corporate finance industry, M&A never sleeps. So Johan, thank you for nonetheless joining us on this to share some of these insights, despite the fact that you are trying to take a well-deserved break. So thank you.

Johan Holtzhausen: Thank you.

The Finance Ghost: Tell you what, we’re going to let you take a break now and we’re going to get Martin to do some work. And Martin, let’s come to you with I think the timing of the bid. I’ve got to say that’s the first thing that jumped out at me.

Until this SENS announcement came out, the next step in the MAS process was going to be the extraordinary general meeting which they had down for, I think it’s the 27th of August – so later this month. And this was at the request of a grouping of large institutional shareholders. They would like a vote on changes to the board.

Now you’ve gotten your offer out a few weeks ahead of that board meeting and I’m keen to understand the timing. And then here’s the tough question, because I think there was a lot of, I think quite valid criticism towards the Hyprop offer where the thing was open for basically a week. People had to say yes or no. Your offer is open for only a couple of weeks, but here’s the nuance to it is it closes – as I understand it and hopefully I’ve gotten this right – it closes before that extraordinary general meeting. I guess some valid criticism that might come your way from the market would be, well, what if we wanted to see that meeting first?

I’m going to let you answer as to the timing of why the offer is now and how that relates to that extraordinary general meeting scheduled for later this month.

Martin Slabbert: Thank you, Ghost. We’ve been in discussions to make an offer for some time and have informed MAS and MAS in turn has informed its shareholders about our intentions long before the EGM was called. By 6 June, almost two months ago, all parties concerned had sufficient details to form a view on our bid terms, even if we have refined those terms since.

The main objectives with our voluntary offer is to protect our investment in MAS, which investment we made to maximise returns for the shareholders of PKM Development, otherwise known as the DJV.

MAS is trading at a low share price, and this combined with the shareholdings by institutional investors of MAS that are also shareholders in other listed property companies, many of which with very poor performance track records, is undermining our objectives as it makes MAS vulnerable to opportunistic takeover bids, as we’ve seen with Hyprop.

You know, Ghost, when the institutional shareholders with multiple public company investments in the same sector play the cards, the independent shoulders become collateral damage. We feel that we have to act to unlock value for all MAS shareholders and to safeguard shareholders, especially independent shareholders, which forms a majority of the shareholders in MAS, against another opportunistic bid. With funding into the amount of €230 million, approximately R4.8 billion in place, we are now in a position to launch with the necessary confidence and flexibility to ensure a successful outcome.

Now, we are not against the EGM and we’ve expressed prior to the EGM being called that we are supportive for the board to appoint additional independent non-executive directors to strengthen the board of directors of MAS. The shareholders that called the EGM had no need to do so if they wanted our support to appoint additional directors. There are a number of aspects that concern us regarding the EGM notice which I will delve into with your permission.

First is the identities of the four directors put forward as well as the condition that the election of these directors need to coincide with the removal of Mihail Vasilescu. It is abnormal for a large shareholder such as Prime Kapital not to have any board representation at MAS. It is also inappropriate in our view to put forward Des de Beer and Stephen Delport as non-executive directors of MAS, given their involvement in Lighthouse. As we understand, Mr. de Beer is a major shareholder in Lighthouse and a director of Lighthouse. Lighthouse has European property interests and growth ambitions on the continent and we think Lighthouse is a party that may well develop an interest in MAS, similar to what Hyprop had, at a low share price. This would be a very dangerous development for shareholders that don’t have larger shareholdings in Lighthouse than what they have in MAS, as I expect is the case with many of the institutional shareholders in MAS.

We want to avoid the repetition of the Hyprop bid and prevent directors with potential ulterior motives being elected to the board. These two director nominations come as a package with two others, which is odd. The nomination requires the appointment of all four and the removal of two directors, including our representative on the board, which would then make these four appointments a majority of the non-executives. I reiterated we will support the appointment or election of genuinely independent nominations, but not on the basis that Prime Kapital is left with no board representation.

Whilst I’m at that, let me address also some of the points raised in respect to the DJV by commentators. Some of these points are themes in the EGM notice. It seems to me that some of the questions are motivated to raise suspicion and to undermine our integrity which points to ulterior motives.

First is the DJV contract and disclosure on the DJV. As I’ve alluded to before, there’s a summary of the agreement by Webber Wentzel on MAS’ website for anyone to read. It is clear that all price sensitive information regarding Prime Kapital and MAS’ relationship via the DJV has been disclosed before the publication of the summary. As mentioned during our previous broadcast, Hyprop’s CEO was a prominent non-executive director of MAS at the time when MAS’ board of directors determined appropriate disclosure around the DJV.

There are calls for the DJV agreements to be published in full, but these are disingenuous. It would be highly unusual and the parties that are calling for the publication knows this. The reasons are straightforward. Agreements of this nature naturally include private information that relates to how parties structure and execute their developments and operations, which is in their competitive interest not to be made public. So we definitely won’t want that to be disclosed to competitors and hence we wouldn’t agree to the publication of the agreements.

The second narrative that I would like to address is that dividend distributions by MAS were stopped due to disputes with Prime Kapital about DJV distributions, or because the DJV does not distribute dividends to MAS. These contentions are simply inaccurate. First, MAS suspended the dividends prior to the DJV doing so, and second, the operating income in the DJV subsequent to the sale of all of its completed assets in 2022, was relatively low. MAS’ distributable income from the DJV over the period when the DJV did not distribute its operating income to MAS would have approximated around a quarter of MAS’ own distributable income. So you see, mathematically, MAS needed to suspend no more than a quarter of its own dividends due to the DJV doing so, or otherwise put, if it is the DJV’s dividend suspension that caused the issue, MAS could have comfortably continued to paying dividends at 75% of its normal payout ratio.

The real reasons for MAS suspending dividends are well documented and it is due to a meltdown in the sub-investment grade European bond market that spooked the company and caused it to take a decision to refinance unencumbered properties in the secured bank market and to accumulate liquidity to redeem its bond in May of 2026.

Coming back to the EGM notice, there seems to be the suggestion that Prime Kapital or me were involved with decision making around the mandate for the DJV to purchase MAS shares in 2020 when I was a member of MAS’ board of directors. This is not accurate. The ability for the DJV to acquire MAS shares predated my appointment to MAS’ board of directors in late 2019. Further, when I was appointed to MAS’ board of directors at the end of 2019, it was for a limited period with a very specific mandate. At the time, it was well known that I and the other Prime Kapital-related MAS director Victor Semionov,​ who was appointed in late 2019, would be conflicted. The transaction circular to shareholders in 2019, at the end of 2019, that preceded our appointments, included specific restrictions on Victor and me that precluded us from serving on the DJV board for a limited period and also very importantly, crucially, placed a prohibition on us representing MAS in relation to the DJV. This was approved by MAS’ shareholders. Consequently, MAS’ board decisions regarding amendments made to the DJV mandate in 2020 excluded Victor and me. It is false to say that we are in any way responsible for these. These decisions were taken by independent directors and in the best interest of MAS. Let’s not forget that the DJV produced by our calculation an annual return to MAS at 13.7% in euros over roughly eight years to December 2024. In light of this, it seems to me that MAS benefitted handsomely from this relationship.

Last, there’s a question the EGM noticed around financial assistance which is precluded in Maltese law. Very basically, under Maltese law a company cannot provide financial assistance to another to acquire its own shares. This question is a red herring. The most elementary legal analysis based on facts known to those that posed the question would reveal that MAS’ obligation is to invest in share capital of the DJV and that this obligation preceded MAS’ migration to Malta. So from a legal perspective, even if the investment in share capital could be said to be financial assistance, MAS cannot invoke its change of jurisdiction of incorporation to avoid pre-existing obligations to invest in share capital of the DJV. Basically, in law you are prevented from saying I can no longer fulfil my obligations if I’m the cause of this. Since MAS decided to relocate to Malta and it did so after it agreed to invest in the DJV, it could not use this as an excuse not to fulfil its obligations to invest in the DJV. There are many other points that I could make about this that would make it quite clear that the Maltese provision doesn’t apply here. But from the pre-existing obligation point alone, it should be clear that this question is a red herring.

Could I also elaborate on this point in general as there seems to be the view that the DJV was using MAS’ funds to acquire shares in MAS? Once MAS subscribed for share capital in the DJV, the proceeds of the subscription is the property of the DJV. It no longer belongs to MAS. The management and directors of the DJV have an obligation to maximise shareholder value for their shareholders. The vast majority of capital in the DJV has been deployed in property development – more than R17 billion since 2016, seven times more funds than we used to purchase MAS shares to date. The DJV is a legitimate large-scale developer and generated enormous value over these years, which led to generation of significant additional equity in the DJV. The DJV applied its own resources to acquire MAS shares when it was considered the most appropriate and advantageous risk-adjusted returns for its shareholders in line with its mandate.

So, in conclusion, we support the appointment of further directors, but they need to be fully independent and cannot be made on the basis that we have no board representation. Given the demands made by the group of shareholders and the nature of the questions they raised, our concern is that the appointment of the four directors will lead to further disruption and a low share price for MAS, which in turn would make it the takeover target at a price that is unattractive for the majority of MAS’ shareholders and that benefits only those that hold larger shareholdings than the acquiring party.

The Finance Ghost: Martin, thank you. That certainly gives a lot of additional detail. I think, as Johan would call it, dust in the air – and dealing with some of that dust is going to kick up some more dust, I can basically guarantee it. But that of course is why we’re having this conversation and why these conversations are so healthy for the markets and why people need to talk about this stuff openly.

So I just want to confirm a technical point also for my own understanding – this offer that you are making as Prime Kapital is not conditional on the outcome of that EGM? Even if something happens at that EGM where directors are appointed that are perhaps not the way you would have liked it to go, your offer is not conditional on that?

Martin Slabbert: Correct. And you know, I take no joy from raising issues that causes dust to be in the air, but unfortunately these have to be addressed. No, indeed, the offer is not in any way conditional on the outcome of the EGM. The offer stands on its own.

The Finance Ghost: And perhaps it’s also just worth – for those who maybe aren’t super familiar with the shareholder register and it is something we talked about in the last podcast – but if you could just confirm the stake that in this case the offeror and concert parties, or whatever the technical term would be for takeover law on that side would be – what do you currently have in MAS? What is currently controlled by the offeror?

Martin Slabbert: Yes. So the offeror, PK Investments, which is a subsidiary of the DJV, it holds around 22% of the shares in MAS. Outside of this, shareholders in Prime Kapital via their family interests, hold another 13% roughly of MAS. We don’t believe that they are concert parties in the classic sense, but they have been lumped together by MAS’ board and MAS’ board made clear to us that they consider this to be a group that they lump together and that neither of the shareholders nor the DJV is permitted to acquire further shares in MAS other than through an offer to shareholders, unless it of course crosses the 35% combined shareholding and then has to make a mandatory offer under the articles of association of MAS.

Roughly 30% to 35% of this company is held by institutional investors that have shareholdings in other companies. And then there are some independent shareholders that are not in the same position.

The Finance Ghost: Yeah, thanks for confirming that. And concert parties in takeover law is like being pregnant. You either are or you aren’t, there’s no halfway. So the details of that will be in the circular, no doubt. But thank you for at least confirming and giving just some interesting information and insight into the shape of the register because it does make a difference, of course in these corporate finance transactions. It’s key to the way these things are structured.

So just speaking about that register, one of the interesting terms in the offer that I noticed in the short time I had to look at it is that you seem to require sufficient, if I understood it correctly, cash acceptances specifically that will give you a minimum of another 10% of total MAS shares in issue. I just want to understand the reason for that term being in the offer?

Martin Slabbert: Yes, it’s subject to a minimum cash acceptance of 10% of MAS’ shareholders. Other than that, there are no conditions to the bid. PKI has the right to waive that conditionality depending on the outcome on the 14th. The reason for this is that we require a more meaningful stake to maximize and unlock value for all MAS shareholders and critically to be better positioned to safeguard our own and other shareholders interest against opportunistic takeover bids that undervalue MAS’ intrinsic value. In order to achieve our objectives, we have the right to waive this condition, as I said, or to increase the cash available to settle the acceptances. And we will only be in a position to determine whether we increase the cash available once we have a better understanding of shareholders elections. Shareholders have such a wide range of options from which they could elect – they could elect cash, they could elect consideration instruments or even a combination of those.

The Finance Ghost: Okay, so let’s move on from the cash portion of the deal then to this inward listed preference share. So this is an interesting one and certainly in the previous conversations we’ve had on the podcast and in what I’ve written in Ghost Mail about elements of the bid or certainly the original terms that were put out there as potentially being part of the offer-  these inward listed preference shares have always been on the table, but I am aware that you’ve also refined the terms somewhat since they were first put out there. I’m not sure if that was just a market sounding exercise or feedback you got or further thinking about it – maybe you can give us some insights into that as well?

But basically what you’re asking shareholders to do is to say, okay, I’m a MAS shareholder, I now want to get some cash potentially and/or get one of these or a bunch of these inward listed preference shares. Now that’s obviously swapping equity for equity for those who go that route if that’s how the deal plays out. The MAS shares at the moment are a known quantity. I don’t think they’re going to win any liquidity awards on the JSE by listed property standards, but for a lot of smaller shareholders there’s more than enough liquidity there. So they are liquid. In terms of these inward listed preference shares, I personally have some worries about liquidity, but I think you’ve structured it to actually be something that people are looking to hold for a longer term. It feels like that’s the way the terms have been set up.

Perhaps you can just walk us through why you believe these prefs are attractive? Why should investors be considering holding these prefs and swapping out their existing MAS exposure for that instrument?

Martin Slabbert: Thank you Ghost. I think important to point out firstly that no MAS shareholder is required to take up the preference share option and they can choose to do so and if it suits their investment needs.

What we’re trying to address is a number of things. It’s important to note that the instruments offer a euro-based floor at €1.50 per share growing at 7% per annum, or 90% of MAS’ adjusted NAV per share, should this be higher than the floor. This is a low-risk instrument with excellent upside and an attractive floor, in our view.

Given the discounts to NAV at which property shares trade, the redemption value is attractive. You’re not relying on selling the shares in the market in order to receive 90% of MAS’ adjusted NAV per share.

It is hard to gauge liquidity. But these are commonplace and well understood instruments for investors who are looking for this type of risk/return profile.

Important to point out that the balance sheet of the offeror is strong. PKI Investments already holds 152 million MAS shares unencumbered and it will acquire more MAS shares for cash, equivalent to at least €110 million, as part of the voluntary offer, in addition to shares that it may acquire via the consolidation instruments that it is issuing to shareholders.

The Finance Ghost: If we could maybe just talk about the redemption a little bit more then, because that’s obviously very interesting. It sounds like the redemption value, I think you said 90% of the adjusted NAV per share – I mean, just from my perspective, I can certainly echo that that’s a better discount to NAV than pretty much almost the entire property sector is currently trading at. The discount – the average discount is definitely higher than that. So I can confirm that from my side and from what I’ve seen in the markets. I agree with you on that.

What are those redemption terms though, with regards to at whose election, under what conditions? What is the risk for an investor that they take this pref and they think, okay, the 90% of NAV will come, then they grow very old waiting for the 90% of NAV to come?

Martin Slabbert: That’s a good question, Ghost. The terms of the preference share are that they are voluntary redeemable in the first three years and this is to make sure that the instruments are not classified as debt in terms of how we understand South African tax legislation works. Important to note is that PKI is not permitted to use cash received from its MAS shareholding for any other purpose than redemption. So the incentive is not there for PKI to receive cash from its MAS holdings, which is significant and will be larger after this transaction, and then to sit on cash that it receives in respect of those shares and not redeem the preference shares. It would be in Prime Kapital Investment’s interest to use the cash received for purposes of redemption.

From year three onwards, any cash received by PKI in relation to its MAS shareholdings must be used towards redemption. It could never use cash received for anything other than redemption, but doesn’t have to redeem in the first three years. And after the first three years, all cash that is received in relation to the MAS shares that it holds has to be used for redemption purposes. So then redemption becomes mandatory and at the end of the five years, all of the shares are mandatorily redeemable, they have to be redeemed in the five years.

It is our intention to redeem all of the preference shares within the first 18 months. But I think it is important to point out that there is a fixed redemption date in 5 years’ time and that the shares are likely to be heavily over collateralised with underlying MAS shares. And given that we think that the actions we will take will put MAS into a position where it will be paying dividends pretty soon, there will be some cash available early on to start redeeming the preference shares.

The Finance Ghost: Okay, fantastic. So we don’t have a situation where investors are sitting somewhere beautiful like Johan is at the moment and wondering what on earth happened to those prefs they got all those years ago – there is a lot more “redemption” to it than that in terms of how the terms work. So thank you for confirming that. That does make them more interesting, certainly.

Martin Slabbert: I would like to add, Ghost, that as a team – as a business team, in the almost 20 years that we’ve been doing business, we’ve never defaulted on a loan, we’ve never been in a position where we didn’t fulfil our contractual obligations to third parties.

The Finance Ghost: Well, that’s a good track record. Congratulations on that. And I think that does speak to the quality of the offeror involved here. I think let’s maybe bring it home with just some of the protections for minority investors. Because again, in that last podcast we did, there were some concerns raised from your side about what is now a defunct competing bid – it’s gone – how you believed some ways it was treating minorities, etc. And you know, everyone will have different opinions about this, it’s Johan’s dust in the air concept again, I think I might steal that term because it’s really good.

But from your perspective on your offer, what sort of protections do you think you’re giving to minorities? Beyond what you responded to earlier in terms of some of the stuff that’s out there in the market – which was actually very helpful – but beyond that, anything else I think you just want to highlight as people read the circular, they read the announcement? Is there anything else that you think is noteworthy there?

Martin Slabbert: Yes, thank you Ghost. So we’re not necessarily looking for outright control of MAS. We’ll see how what shareholders’ elections look like on the 14th. There’s no intention to delist the company.

We’ve taken into account feedback from shareholders and have proposed additional protections. And I’ll list these very quickly. We have said that we will support the appointment of experienced and genuinely independent non-exec directors to the MAS board in addition to those that are already there. We agree to prioritise the distribution of available profits by DJV ahead of new investments, which is not something we’re contractually obliged to do, but this will help to ensure that MAS has more liquidity so that it can pay dividends in the future. We agreed to follow MAS’ interpretation of the DJV distribution waterfall. We’ve undertaken to refrain from acquiring additional MAS shares in the market – and this is quite unusual – if following the voluntary offer PKI and associated Prime Kapital shareholders hold more than 50% of MAS’ share capital. This ensures that we are aligned to maximise MAS’ returns per share and not to do anything that undermines the value of the shares.

So following the voluntary bid, we intend to engage further on appropriate board appointments and to return capital from a DJV perspective so as to support liquidity from a MAS perspective so that it can return to divis as soon as possible, which we think is as early as September 2025.

I think last and importantly we’ve agreed to ensure that the DJV is given notice to terminate the DJV at the end of its term in 2035.

The Finance Ghost: Martin, thanks, you’ve given a lot of great additional insight there into the transaction. And Johan, to you as well. Thank you for joining us on this podcast.

To shareholders in MAS, I would just refer you to the formal deal documentation, so that’s certainly not just the SENS announcement, what you actually want to be doing is opening up the circular. Go and do the detailed reading. If you ever wondered what corporate financiers do, you’ll find a lot of that in that circular. So go and check it out.

And I think from my side, again I have – I now literally have no horse in this race because as I previously disclosed, I am still a Hyprop shareholder but they’re not even in this race anymore. So I have no horse in this race at all.

And I guess, Martin, I wish you luck with your process in terms of engaging with the market. And to shareholders, I wish them luck in deciding what to do because that’s how these corporate finance deals work – everyone’s an adult and needs to use the facts at hand to make a decision of what to do. And if this deal does go ahead or whatever the case may be, it’ll be good to see, as you say, the value optimisation framework, just to see that happen at MAS, to actually see the thing reach its potential and to see people do well out of it.

At the end of the day, I think everyone just wants to see businesses succeed. I can’t think of too many people who get a kick from seeing businesses fail or do badly. So good luck to you in that process. I look forward to following the story. It is amazing how this Eastern European property fund has become the newsmaker – I think – on the JSE in 2025, I’m not sure that anything else has been quite as interesting so far this year. We’ve had lots of deals, but this one’s had a lot of spicy elements to it, A lot of very interesting stuff.

So, Martin, Johan, thank you for your time and good luck with this process. I look forward to seeing how it goes.

Martin Slabbert: Thank you.